US manufacturing sector continues to shrink in August

By Mucahithan Avcioglu

ISTANBUL (AA) - The downturn in the economic activity in the US manufacturing sector continued in August, according to a Tuesday report by the Institute for Supply Management (ISM).

The ISM manufacturing purchasing managers' index (PMI) registered 48.7%, up 0.7 percentage points from July.

A reading above 50 indicates growth, while below that level shows contraction.

The market expectation for the index last month was 49%.

"Economic activity in the manufacturing sector contracted in August for the sixth consecutive month, following a two-month expansion preceded by 26 straight months of contraction," an ISM statement said.

New orders indicated growth in August, following a six-month period of contraction; the figure of 51.4% was 4.3 percentage points higher than the 47.1% in July.

In particular, the new export orders index rose 1.5 percentage points to 47.6% in August.

"The Prices Index remained in expansion (or ‘increasing’) territory, registering 63.7%, down 1.1 percentage points compared to the reading of 64.8% reported in July," it said.

On the other hand, the production index was at 47.8%, 3.6 percentage points lower than July’s 51.4%.

The backlog of orders index was also down 2.1 percentage points to 44.7% in August.

"In August, US manufacturing activity contracted at a slightly slower rate, with new orders growth the biggest factor in the 0.7-percentage point gain of the Manufacturing PMI. However, since production contracted at a rate nearly equal to the expansion in new orders, the Manufacturing PMI increase was nominal," said Susan Spence, chair of the ISM Manufacturing Business Survey Committee.